Using Escape Clauses For Protection If you feel less than certain that you will be able to go through with the purchase for any reason, you can - and should - go one step further. Insist on adding an 'escape clause' to your offer. This allows you to back out of an agreement without incurring any penalty or disadvantage. This clause should be already in the 'Offer and Acceptance' form supplied by your attorney. If it isn't, ask him how to add it.
Such a clause might state that you will go through with the deal, but only if certain other things happen. For example, you'll complete the purchase provided your partner or mortgage lender or attorney approves it. Remember, this offer document is not the full Purchase and Sale Agreement. That will be drawn up later by your attorney (or approved by him) if your offer is accepted. And, it will spell out in detail the conditions attaching to the purchase.
The escape clause (often called a 'contingency' or 'contingency clause') in the Offer and Acceptance document serves only one purpose, to allow you the right to withdraw without any cost or further obligation to you. This is a matter you should cover in your preliminary talk with your attorney. At the same time, seek advice on how to go about putting a deposit on the home you select. And keep in mind that an offer to purchase can be withdrawn at any time prior to acceptance, with or without an escape clause .
When it comes to handing over money, my own approach is one of caution. Even when protected by an escape clause, I believe it's wise to give the agent the smallest possible deposit (sometimes called an earnest money deposit' or a 'good faith' deposit). This is the money the agent looks for before he submits your offer. If you decide later to pull out of a deal, a properly worded contingency clause can guarantee you will get your money back. Without such a clause, you could forfeit your entire deposit.
This Tip was excerpted from:
Not One Dollar More!, by Joseph Eamon Cummins, Kells Media Group, 1995.
ISBN# 0-9638215-9-8. |
